Final Rule: Contractors Must Turn Themselves In Regulators have issued a revised final rule requiring contractors to report any wrongdoing on federal contracts. Failure to confess would be grounds for suspension or debarment. The rule applies to contracts worth more than $5 million or lasting more than 120 days. It requires companies to report “credible evidence” of fraud, violations of the civil False Claims Act or significant overpayments. The report must go to the agency’s inspector general, who can initiate criminal investigations, as well as to the contracting officer. The Federal Acquisition Regulation councils said, “There is no doubt that mandatory disclosure is a ’sea change’ and `major departure’ from voluntary disclosure, but [the Justice Department and inspectors general] point out that the policy of voluntary disclosure has been largely ignored by contractors for the past 10 years.” The rule was widely opposed by industry and has undergone repeated revision. The latest final rule, effective Dec. 12, was issued to implement the Close the Contractor Loophole Act passed by Congress last summer. Congress members objected that the earlier rule did not apply to overseas contracts; the new one will. The earlier rule said a contractor must report wrongdoing as soon as there is “reasonable grounds” for suspicion. The new rule says the contractor should determine if there is “credible evidence” of a violation. “It’s about striking the right balance,” said the acting administrator of the Office of Federal Procurement Policy, Lesley Field. “We want disclosure and made it very strong that contractors could be disbarred for not disclosing, but also want to show some semblance of fairness when there is uncertainty.” While the rule says large companies must set up a formal system of internal controls and ethics training, small firms are exempt from that requirement. The rule is FAC 2005-28, FAR case 2007-006, in the Nov. 12 Federal Register.